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Issue and Evaluation of shares for Existing Businesses

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Issue and Evaluation of Shares for Existing Businesses

IAs per the rules and guidelines of Securities and Exchange Board of India (SEBI) or Reserve Bank of India, for a listed company, the issue price of the share shall be either at:

  • Average of weekly low and the high of closing rates of the related stocks quoted on stock exchange in 2 weeks previous to relevant date, or
  • Average of weekly low and high of closing rates of the related stocks quoted on stock exchange in 6 months previous to relevant date.

The stock exchange mentioned here is the one where the highest traded volume in terms of the share of the company has been tracked in the previous 6 months before relevant date.

The relevant date may be defined as the date 30 days before the day on which the General Body meeting of the shareholders is convened.

In other instances a business may issue company shares according to the RBI guidelines compliant with the rules and guidelines issued by previous Controller of the Capital Issues.

Other related guidelines of RBI/ and SEBI, included of SEBIís Substantial Acquisition of Shares and Takeovers Regulations, 1997, whenever applicable may need to be obeyed.

Issue of Rights Shares and Bonus Shares

General consent from the Reserve Bank of India is available to the India-based businesses to issue right shares or bonus shares, subject to meeting some conditions. Prerogative of getting right shares isnít automatically obtainable by the investors that have been chosen to get these shares as Overseas Corporate Body or OCB. The right share issuing organizations may need to get particular consent from the Reserve Bank of India, Foreign Exchange Deptt, Foreign Investment Division, Central Office, Mumbai for issuing of right shares to former OCBs.

Issuing of Share after Merger or Amalgamation

When a merger or amalgamation scheme between two or more India-based businesses has been permitted by an Indian court, the transferee organization may allot shares to its shareholders of the transferor organization dweller outside India. But it has to be ensured that the proportion of shareholding of the individuals dweller outside India in transferee or the new company doesnít surpass the proportion mentioned in the consent sanctioned by Central Government of India or Reserve Bank of India (RBI). The allotment of the right issues may not be automatically available for the investors that have been entitled for such shares as Overseas Corporate Bodies. For this particular case consent from the RBI is required.

Issuing of Share under the ESOP Scheme

Under the ESOP scheme, an organization may issue shares to its workers or workers of new joint venture or fully owned subsidiaries overseas that are dwelling outside, either directly or via a Trust. But only under the condition that the ESOP scheme has been drawn in respect of the related rules of the SEBI and the face value of these shares allotted under this scheme to the non-resident workers doesnít surpass 5 percent of paid-up capital of issuing organization.

Related Topics:

  • Indian Foreign Direct Investment Policy

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